Jaa Neh! South Africa is standing on an economic quicksand that threatens to have it defined as a failed state. Its 'fearful trip' might have begun. It is in a state where thinking about how it reimagines itself is as equally important as doing what needs to be done to get it on a path to global competitiveness. Whilst an unfortunate convention seems to have been established that getting out requires a political solution first, evidence is disputing this convention by demanding from its thinkers solutions that are of a political economic nature.
In its foremost nation founding statement, the Constitution, South Africans declare, and amongst others, an intent to 'improve the quality of life of all citizens'. In this aspect of their declarations, the nation commits to establishing templates of economic prosperity whose core object is to recalibrate its political economy into a national asset outweighing all other liabilities created by it's difficult race defined past. The national resolve, with worrying acclamations from colonisers and known apartheid funders, is a call for 'all that live in it' to be at the centre of the assignment.
This assignment has already received its first attention when the country defined and/or agreed on 'the arrangements with which to govern itself, otherwise also referred to as a democracy'. In the Constitution, South Africanness was defined to be based on a 'belongs to all who live in it basis'. This basis, marked a new beginning of how to onboard economic aspirations of both the land dispossessed and land dispossessors. For indigenous South Africans, who are in the main humans of African origin, it introduced a land ownership basis that recognised the status quo, and liquidated any other basis.
The 'National Grievance', land dispossession, a key ideological substrate of all anti-colonial struggles has in the context of a belongs to all paradigm of nation definition found itself subjugated. The settlement of this dispute has now become transactional, and subject to willing buyer willing seller principle. The political emotions around it now mean nothing less than ability to transact in the courts or banks. The basic of all capital is land.
If citizenship defines the individual's equity in a sovereign enterprise such as a country, South Africa, its owners should be as sovereign as the country they live in. Arrangements on how to govern the political economy should be about managing citizen equity for the collective good of all who live in it. In this way a political economy will generally be managed to benefit those in a country.
It is for this reason that the locus of economic power, otherwise also referred to as the commanding heights of the economy, should be a sovereign asset whose management and control must at all material times be for and on behalf of citizens as equity holders of South Africa as a human enterprise with sovereign borders.
Humans of African origin that find themselves in a geographical space called South Africa, and defined by its constitution as citizens, have a privilege, right or claim to expecting post-1994 economic arrangements to fracture any templates of dominance formed against their prosperity. It is through the commanding heights of the South African economy that these templates can be fractured to allow new economic pathways to emerge. The ecdysis of our economy that happened since 1994, euphemistically called Black Economic Empowerment, has kept the 'snake' in tact. The sheer volume of activity generated through these commanding heights, and the impact of their efficient management of the gross national product, makes them not only a national asset but a matter of national interest.
What are commanding heights?
Whilst the concept has its origins in Marxist-Leninist thought, it has developed to find expression outside its originative-historico-ideological-background. The allocative power of state involvement in any economy, etched in the monopoly of policy making given to government as an agency of the state, spawns out interesting paradigms of the concept; most of which are outside its Marxist connotations. It is now a concept that has found a currency of utilisation in classical Keynesian economic schools. It is a polyvalently applied concept whose breadth defines modern day developmental states.
Emerging in a context where there was visible failure of the state caused by the experimentation of policies whose implementation seemed to have ignored the collective role of all citizens, individual and corporate, in growing an economy. As a Leninist construct, the concept emerged somewhat as a compromise path between the need to keep state control and regulate the exigencies of allowing the private sector to drive growth in a communist state. In addressing the Communist Party Conference of 1922, and introducing the new economic policy of the Soviet Union, Lenin advanced a thesis to the effect that the state would still retain control of what he called the 'commanding heights', but profit-making private sector participation would be allowed where the State fails.
In his thesis, (a thesis that has in fact concretised through evidence as one that propelled most advanced economies save being undergirded by special state involvement efficiencies) Lenin argues that commanding heights 'are -critical sectors that dominated economic activity', these include energy security, logistics efficiency, water security, manufacturing support, mineral resources beneficiation, and public sector spending. Had he lived in the 21st century, he would have included in the mix, health and food sovereignty, broadband security, national data security, and financial flows management as commanding heights.
For decades since the Lenin 1922 address, there have been debatable suggestions on the correctness or otherwise for these commanding heights to be publicly run, deregulated and/or outrightly privatised. What has emerged unscathed in the debates is the correctness in characterising these as commanding heights of an economy. In fact, evidence is emerging in countries like China and Rwanda that asymmetrical deregulation of aspects of the management and control of commanding heights provides a platform upon which national interest driven economic pathfinders could be created.
Whilst the public-deregulation-privatisation continuum of policy choices is centred around a tussle between the extreme axis of central planning and market economics, the real and actual essence of the struggle is the national interest etched control of these commanding heights. In recent times, and unfortunately in Africa, this has been about who benefits from the potential revenues creates out of such decisions. This has also grown to be more about who controls them, if it is not government, than whether it should be the private sector.
In South Africa, the debate around the management and control of commanding heights is choked by the various societal expectations of state owned entities. Their history in propelling a pre-1994 apartheid and race-based developmental state into Africa's most industrialised nation, have made them them jewels through which the status quo could either be fractured or maintained. Their command of mega infrastructure spending and thus procurement spend related thereto makes them the biggest in-public-sector-control levers to alter any stubborn aspect of economic transformation the South African economy wants changed.
It is no surprise that after the 1994 political settlement, it was the privatisation or otherwise of these commanding heights that received attention of most multilateral financing institutions' attention. In fact, any significant debt advanced to South Africa had their 'restructuring' as a conditionality the nation would find it difficult to renege on. Revelations of malfeasance or otherwise in the awarding 'green contracts' for resources supply to ESKOM, and 'contracts' to onboard power produced independently onto the grid at prices that make lowest grade economics look like a circus, attest to the centrality of these commanding heights in the political economy of societies.
Notwithstanding, economies will grow or collapse at the behest of how their commanding heights perform. This is irrespective of whether they are in public or private hands. In sovereignty politics, what might be at issue is the degree of restraint that foreign investors can exert on an economy to protect 'shareholder' interests that may not be in the national interests whence from shareholders come. South Africa, and indeed Africa has experience of such extractive economic thinking in the mineral beneficiating industries.
With the world fast leaping into an industrialisation phase that operates beyond sovereign borders, and creating new sovereignties governed in cyberspace's, the capability of states to influence commanding heights is dependent on efficiencies they put to manage them in a manner that creates dependability on them by an otherwise physically constrained and yet virtually agile citizenry, individual or corporate.
In South Africa the commanding heights of our economy have for some time been;
- Energy Security. The centrality of energy to any dream of industrialisation makes it a resource whose control requires a national interest mindset that cannot be guaranteed by private sector bottom line chasing ethos. Energy, particularly electricity, access should by now have been declared a human right. Its facilitative prowess to an 'improved quality of life for all citizens' cannot be left to the whims of private capital. As at 1994 ESKOM, still a electricity supply commission, meaning a state entity commissioned to supply electricity was at the centre of electrification. It had a capacity of 45 megawatts with a smaller economy, and as the economy shrunk since 1994, its capacity did not shrink (and yet we load shedding). There are many electricity gobbling industries that closed down after democracy as market liberalisation allowed cheaper goods into the economy and made local and unionised labour costly.
- Water Security. Water is a national resource. Food sovereignty, food security and nutrition security is dependent on a nation's ability to efficiently manage its water resources. Other uses of water in an industrial sense also advocate for these resource to be seen as an economic commanding height. As at the 1994 change of political power South Africa had water boards and authorities that were intricately intertwined with the food production food chain, mining industry, foundries that still existed, food processing plants in the west Rand, silos that were mostly full, feed lots and abattoirs attached thereto, healthcare facilities that had own water supply lines and pumps, and so on. These all were evidence of how commanding a height water was.
- Transport and logistics. Human, goods and services movement is what defines most transactions defining an economy. The capacity of an economy to move these from supply points to demand points is a function of its competitiveness. There is therefore a need for state involvement in this commanding height. This can, like in others, be regulatory, subsidising, outright ownership, and/or public-private partnership arrangements.
- Defence Industry Security which propelled the bulk of the nation's innovation. The 'laager' economic planning mentality of the apartheid state created an economic system where the defense of apartheid as a system required internal capacity to self-arm. This made the then decision makers to think of the economy in 'we are on our own mentality'. The economy created resiliences that could survive the absence of Foreign Direct Investment in the armament industry. This industry had multiplier impacts whose potential are still outside the purview of the current incumbents, or they are 'restricted' to play in that space unless as 'consumers' of other 'innovations'.
In his rendition, though later spin-managed into a collective Cabinet rendition, on a economic recovery plan and/or strategy, the National Treasury Executive Authority wielding ministry proposed a strategy whose object was to propose a path to recovery. The strategy identifies three of these commanding heights as 'network industries'. It sees them as being the primal to any conception of economic recovery.
In a nomenclature that conditions all ideational basis of the economic recovery plan, the strategy avoids to characterise these network industries as commanding heights of the economy, amongst others. Noteworthy of what the strategy proposes is the need to unbundle how these industries are organised or rather how concentrated is their management given the need to liberalise them for 'market participants' to introduce 'competition induced efficiencies', otherwise found to be predominantly a province of private sector 'competence'.
The unbundling model creates three distinct, interdependent and interrelated domains of industry delivery 'efficiencies'. These are service generation, transmission and distribution. In respect of energy it would mean power generation would be governed as a separate process that would 'open' the generation business to 'market participants' who will compete for 'transmission grid' on boarding based on criteria compliant to sustainable development goals determined elements.
The adoption of this unbundling process, climate change compliance plausible as it looks, might redefine other value chains in the economy with remarkable livelihood changes to societies whose very basis are mining resource based and defined. In fact, there are towns in South Africa whose existence would be difficult to imagine outside of their (coal) mining hub character. The multiplier industries en route to these towns are mining industry defined. It would not only be industries and energy generation assets that would be stranded, but societies associated thereto might be stranded equity holders of the enterprise called South Africa. Notwithstanding, it is how energy generation is characterised that will define it as a commanding height or otherwise.
Transmission and distribution are in fact defined in the new approach as a form of 'economic democratisation' without explaining how and who the new entrants will be. Base infrastructure developed by the state is seen as an asset to be surrendered as 'the nation's skin in the game' into new enterprises that will give as return on investment efficiencies through which 'sustainable economic growth' could begin the 'illusive' recovery. It is argued that such growth will create a new cohort of job creators who will reduce the unemployment rates. This theory is so highly concentrated that the Lesotho Government is on a transaction advisory process on how it positions itself for public-private partnerships on water generation into South Africa, and we have seen the ESKOM circus on alternative energy procurement,as well as the drama being staged in the logistics industry.
What then should be the commanding heights of the South African economy, in our context of wholesale privatisation or market liberalisation; the New Dawn?
As we Thinc, we listen... the next instalment will be instructed by your contributions...let us/me pause..
🤷🏽♂️Be ngisho nje
🤷🏽♂️Be ngibuza nje
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